Follow Us!

When you’re looking at saving and planning for retirement, it’s important to know how much you can expect to be spending. The latest retirement standard figures and other data sources can give you an idea of the cost of retirement, but what else do you need to take into account to ensure your financial wellbeing?

Running the numbers – the retirement standard

Since June 2006, the Association of Superannuation Funds of Australia (ASFA) have been monitoring the living costs associated with retirement. Every quarter they research and publish the average annual budget singles and couples aged around 65 can expect to spend when living a modest or comfortable lifestyle in retirement. This is known as the “retirement standard” and for some time it’s been a popular yardstick for what it costs to live as a retired person in Australia.

Your definition of comfortable

For a modest way of life, think essential living expenses, taking holidays in Australia only and limited spending on upgrades to cars, appliances and electronic items. Things like international travel, a new car from time to time and eating out on a regular basis are definitely the trappings of the “comfortable” lifestyle category.

Of course your idea of what a comfortable lifestyle looks like – and the money it takes to live it – could be quite different from the retirement standard definition and estimates. The amount you earn and spend in the lead up to retirement is just one of the things that can influence your budget and spending patterns after you’ve left work. How and where you plan to spend your retirement is also going to affect how much income you’ll need.

The big ticket items – health and energy

According to a recent media release from the ASFA, budgets for singles and couples living comfortably have risen 23% and 26% respectively in the decade since the first retirement standard figures were published. The increases for a modest lifestyle are considerably higher, at 33% for a single person and 36% for a couple. As the ASFA have identified the rising costs of power, food, rates and health care as the main culprits for these changes, it’s not surprising that the impact is greater for those living modestly. In any household budget, these four items would be considered essentials rather than luxuries.

The modest living retirement standard figures are running well ahead of the Consumer Price Index (CPI) increase for the same period which was 28.6%. But while it might seem retired people living a simple life are worse off than they were 10 years ago, changes in the aged pension tell a different story. In real terms, the aged pension rose by 70% for a single person and 54% for couples during this time, making it possible for retirees to cover their living costs, in spite of major price hikes for essentials.

Relying on the aged pension?

This is an important reminder of the significance of the Age Pension in supplementing income from your super. In fact, the latest quarterly Milliman Retirement Expectations and Spending report published in June 2017, claims the median annual expenditure of a couple aged 65-69 is just $34,858, which is only marginally higher than today’s full aged pension allowance for couples of $34,819 per year. But as January 2017 changes in assets and income tests for the age pension demonstrate, it’s difficult to have certainty about your future entitlement to government benefits in retirement.

Taking home and health for granted

Something else to bear in mind when calculating your own personal retirement budget is whether you own your own home and how you’re doing health wise. Retirement standard figures are based on two important assumptions – you live in a home you own outright and you’re in good health. So if you’re likely to be renting for the rest of your life or spending on a mortgage or medical bills in the early years of retirement, you’ll need to factor this into your budget.

Advice could make a difference

Even with the help of carefully compiled estimates, surveys and reports from the ASFA and Milliman, figuring out how much you should be saving for retirement and how best to invest it for a healthy return can be a challenge. Seeking advice from a financial planner can help you understand the superannuation balance you’re going to need to retire in comfort and come up with a strategy for working towards that target.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Footnotes:
[1] ASFA Media Release Retirement cost increases driven by power prices, health care, food and rates 29 May 2017 “Between June 2006 and March 2017, the RS budget at the modest level for a single person increased by 33 per cent, while the single comfortable budget rose by 23 per cent. The budget for a couple at the modest level increased by 36 per cent and at the comfortable level by around 26 per cent.” https://www.superannuation.asn.au/media/media-releases/2017/media-release-29-may-2017
[2] ASFA Media Release Retirement cost increases driven by power prices, health care, food and rates 29 May 2017 “Over the period, electricity costs increased by 124 per cent, health costs by 60 per cent, property rates and charges by 83 per cent and food costs by 24 per cent.” https://www.superannuation.asn.au/media/media-releases/2017/media-release-29-may-2017
[3] ASFA Media Release Retirement cost increases driven by power prices, health care, food and rates 29 May 2017 “ASFA CEO Dr Martin Fahy said the figures compared to an overall 28.6 per cent increase in the Consumer Price Index (CPI).” https://www.superannuation.asn.au/media/media-releases/2017/media-release-29-may-2017
[4] ASFA Media Release Retirement cost increases driven by power prices, health care, food and rates 29 May 2017 “Over the more than 10 year period, the maximum Age Pension increased in real terms, by 70 per cent for a single person and 54 per cent for a couple.”https://www.superannuation.asn.au/media/media-releases/2017/media-release-29-may-2017
[5] Milliman Retirement Expectations and Spending report Q2, 2017, 30 June 2017, page 8 “the Age Pension is expected to fund a large portion of household spend for many couples. The observed median annual spend for couples aged 65-69 is $34,858 which is only slightly higher than the full Age Pension.”

What’s holding you back from taking control of your financial future? Discover the five mind tricks that can stop you from achieving financial success and what you can do to avoid them.

1 Fear of failure
Earning and saving money from your salary is all very well. But setting up an alternative income stream from an investment portfolio can help you make the most of your personal wealth potential. So what is it that holds people back from taking their first steps into investing? According to recent surveys, 70% of millenials would rather keep their savings in cash1 instead of investing it and getting the benefit of compound interest. And one of the main reasons for their reluctance is their fear of losing what little money they have.

Fear is certainly one of the biggest reasons for avoiding the risks, large or small, that come with investing money. And no-one has a magic wand to eliminate these risks altogether. But with advice from a professional who understands your financial circumstances and goals, you can get off to a successful start in investing that builds your confidence as well as your wealth.

2 Waiting for wealth
It’s all too easy to just wait for someone else to sort out your financial future. You might keep saying that you’ll start building your savings and wealth when that golden goose lays its egg for you. And that egg you’re counting on – whether it’s a higher salary, bonus or redundancy payout for your employer or a gift or inheritance from your family – may never arrive.

If this is the fairy story you’ve been telling yourself, it’s time to rewrite it with yourself as the hero. By sticking to a budget, coming up with your most important goals and creating a financial plan to help you reach them, you’ll soon become your very own golden goose.

3 The high price of inertia
We’re all busy people and we all have a comfort zone. And that’s why inertia can so often stand in the way of spending less and saving more. In fact, inertia is seen as such a big problem for personal financial security in the UK that a new Institute of Inertia has been established at the University of Sheffield to study behaviour that’s estimated to cost the nation £7.6 billion.

Inertia can mean spending more than you need to on your energy or grocery bills. It could also be stopping you from tracking down lost super and/or bringing together all your super savings in a single fund to save on fees. Or it could mean sticking with the same mortgage when you could be saving thousands in interest by switching. Whatever it is that you’re not getting around to doing to save money, having a financial coach – personal or professional – can keep you accountable in taking small steps towards big savings.

4 The lifestyle inflation trap
The “earn more, spend more” phenomenon has been dubbed “lifestyle inflation” and it’s something that can really get in the way of preparing for a better financial future. The dangers of behaviour that comes from lifestyle inflation are twofold. The first is what’s known as the Diderot effect. This happens when you buy something new, stylish and beautiful and it makes all your other stuff seem shabby and old. So you start to replace everything else as well.

The second issue is your new level of wealth can’t last forever. Even if you keep earning more a time is going to come when you’ll stop. We call it retirement and if you’re not saving and planning for it, the fall in your spending and standard of living is going to be very steep indeed. So if you’re finding it hard to save even when you’re earning more, try looking into the future and imagining how much you’ll be enjoying life when you have to budget carefully to pay for food and other essentials, let alone buy anything new.

5 Winging it won’t work
Leaving your finances to chance won’t bring you the peace of mind that comes with prosperity. Having the money to back future choices – for your career, family and lifestyle – isn’t going to happen by accident. People who make it look easy have probably put in quite a lot of time and effort to ensure they’re in a good place financially.

If you’re naturally a happy-go-lucky kind of person you’re probably well-liked for your carefree generosity. Especially when you’re the first among your friends to open your wallet and pay the lion’s share of the bar or restaurant bill. Sticking to a budget doesn’t have to mean being stingy. It’s more a case of picking and choosing your generous moments so you can still cover your day-to-day expenses and put some of your money towards providing for your future.

Whatever obstacle you’re trying to overcome on the path to financial success, a financial planning professional can offer valuable advice on making changes to get you in control of your finances.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

If you are currently spending less than you earn, you could use your surplus cash flow to save on interest and reduce your debt faster.

Home loan interest is usually calculated on the daily balance, even though it may be charged against the loan less frequently. You can therefore reduce the average daily loan balance and save a considerable amount of interest by:

Increasing the repayment frequency (e.g. from monthly to fortnightly). This can reduce your average daily loan balance even though the annual repayments remain the same.

Increasing the repayment amount. This involves using more of your surplus cashflow to pay off your loan sooner.

Crediting your entire salary automatically into your home loan or a 100% offset account1 (if available). By doing this: – Your salary hits your loan account sooner, having the same effect as increasing the repayment frequency. – Your salary is immediately used to reduce the size of the loan, having the same impact as increasing the repayment amount. – You may achieve a higher after-tax return than if your salary is paid into a cash account. This is because your salary will reduce the balance on which your home loan interest is calculated. As a result, you will effectively earn the rate of interest charged by your home loan and no tax is payable on these earnings. – You can access your money (either from a 100% offset account or using the loan’s redraw facility2) to meet your living expenses during the month.

The following should be considered when looking at using cashflow to reduce debt:

If you are considering salary crediting, check whether your payroll provider can pay your salary either directly into your home loan or a 100% offset account.

Your lender may not allow you to make additional repayments into the fixed rate component of the loan.

You should ensure you have enough insurance to protect your income and cover loan repayments in the event of your death or disability.

Case study

Jessica and Roger have a home loan of $400,000 and are making repayments of $3,153 per month. Jessica receives a fortnightly salary of $2,700 after tax and Roger earns $1,800 after tax. Their combined living expenses are $5,000 per month (excluding loan repayments).

The following table shows the results from three different strategies.

These include:

Increasing the repayment frequency from monthly to fortnightly (by paying $1,455 each fortnight rather than $3,153 per month).

Increasing the repayment amount by $20 per fortnight to $1,475.

Crediting their entire salary into a 100% offset account and withdrawing money as required to meet their living expenses. By doing this, their entire surplus cashflow will be used to accelerate the repayment of their debt.

By using the salary crediting strategy, Jessica and Roger could reduce their home loan term by over 5 years and save up to $198,875 in interest. Also, by paying off their home quicker, they’ll build a considerable amount of equity in the family home each year.

Assuming they then wish to build their wealth further, they could use this equity as security for an investment loan.

Loan Term

Total Interest Payments

Before strategy

20 years

$355,988

Changing payment frequency

19 years 2 months

$327,721

Increasing regular repayments

18 years 8 months

$317,021

Salary crediting

9 years and 10 months

$157,113

Assumptions: The home loan interest rate is 7.5% pa. The home loan term is 20 years. Jessica and Roger earn annual pre-tax salaries of $94,850 and $58,550 respectively. Salaries and combined living expenses are increased by 3% pa.

1 An offset account is a transaction account that is linked to a home (or investment) loan and the balance is directly offset against the loan balance before interest is calculated.

2 If your home loan has a redraw facility, you can make extra payments directly into your loan and withdraw the money if necessary. You should confirm with your lender whether any fees or other restrictions apply. Source: MLC.

One of our expert Financial Planners can help you assess all the issues that need to be considered and determine whether and how you could use your cash flow to pay off your home loan faster.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

guidance on administration aspects, such as using a SuperStream compliant payment process.

The ATO has also developed a step by step guide for employees who have unpaid super that includes a tool to estimate eligible super contributions through to lodging an enquiry to report employers for unpaid amounts.

The ancient Romans coined the phrase ‘Carpe Diem’. You too can seize the day with total and permanent disablement (TPD) insurance. This is your financial back-up plan. It gives you the confidence to seize life’s possibilities, knowing you’ve made plans to secure your family’s financial future… just in case!

TPD insurance will provide a lump sum payment in the event you suffer an illness or injury which totally and permanently prevents you from working again.

Broadly speaking there are two definitions of TPD:

Own occupation – The insured must show that they have a total and permanent disability that prevents them from working in their own occupation which they disclosed when applying for this cover. ‘Own Occupation’ is a more liberal definition of disability because, even if you can work in another occupation, you may still be eligible to receive disability benefits. Own occupation coverage is often more expensive, and may only be available to individuals who have a clean medical history and work in a relatively risk-free occupation.

Any occupation – The insured must show that they are totally and permanently disabled and unable to work in their usual, or any other occupation for which they are reasonably suited by their education, training or experience.

‘Any Occupation’ is often the cheaper option, however it can be more difficult to meet the requirements of this type of disability definition.

Some insurers have a third definition available to clients – a ‘homemaker’ definition. Payment of benefits under this definition would be based on the proviso that the insured, through sickness or injury, is unable to do any normal physical domestic duties and will never be able to do so again.

Factors to consider when considering TPD insurance are:

Make sure you have adequate coverage.

Changes in your personal circumstances often necessitate the need for higher covers of insurance.

There may be taxation consequences where a disability lump sum superannuation payout is made.

TPD insurance can provide a lump sum benefit which can be used in many ways, such as helping to pay for recovery and rehabilitation costs, such as refitting your home, enabling a partner or family member to reduce their work hours to care for you, paying for a professional carer or providing much-needed funds to repay debts, and creating an ongoing income stream for the future.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Running a successful business takes time, money and lots of hard work. Insuring your business should be top of your mind when you’re thinking about what might happen if you were totally and permanently disabled and couldn’t work.

No one wants to think about the what-ifs but if you are a partner in a successful business, the ‘what-ifs’ can’t be ignored.

Perhaps you started your business with a group of friends and built your dream together? Perhaps you bought into the business, or inherited it from your family? Whatever your situation, the relationship you have with the key people in your business probably extends beyond your work.

You’ve shared the highs and lows of building and running a business as well as your personal ups and downs. You’ve probably shared social occasions and know each other’s spouse and children. In many ways, your lives are probably entwined.

What if something happened to you or another partner in your business?

What would happen to your business or family assets if you were to die or become permanently disabled?

If you died, would your business partners be able to pay out your family/estate for your share of the business?

Would your estate be liable for your business guarantees if you were to die or become permanently disabled?

What would happen to your family if you were no longer bringing in an income?

How would the business survive the loss of one of the partners?

Now is the time to discuss the ‘what ifs’. It’s also the time to put plans in place to decide what would happen if you or another business partner suddenly left the business or who would take over and how the business would be valued.

Business insurance is not just about securing the future of your business… it’s also about securing the future of those you care about and who rely on you for financial support. Contact us today to discuss which insurance option is best for your business.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Investment risk and return are closely related. In general, the higher the degree of risk associated with an investment, the higher the probability for greater returns, but also losses. Higher risk investments are more suitable for high growth or ‘aggressive’ investors.

Low risk investments on the other hand, such as cash, offer relatively lower returns because of the security of the investment and are more suitable for risk adverse or ‘conservative’ investors. This is called the risk/return trade-off and is used as a guide to the asset allocation that is most appropriate for you.

The long term risk/return trade-off between different asset classes is illustrated in the following graph:

With this in mind, any investments recommended should be consistent with your risk tolerance level.

While most of us relate the term ‘risk’ to the level of investment price fluctuation, there are many other factors to consider.

Types of risks

Legislative risk is the risk that there are changes to government policy in terms of tax, superannuation and pension regulations, which are unforeseen at the time of the initial investment.

Risk of not diversifying is the risk that if you put all of your investment into one asset class, a fall in that class will adversely affect the total value of your portfolio. This is primarily a concern if, at the time of the fall in the market, you need to draw on your capital. You may, therefore, be forced to sell some of your assets at the bottom of the market. Fortunately, each of the asset classes tend to run in different cycles, so if one is performing well, and another is not, your overall portfolio returns may be ‘smoothed’ by investing across a number of different asset classes. Diversification is a strategy aimed at reducing the impact that any one asset class will have on your overall portfolio.

Timeframe risk is the risk that your investments may not be suitable to your specific needs. It is important to focus on two critical factors: your objectives and your timeframe for investment.

Inflation risk is the risk that the value of growth in your income and investments may not keep pace with the rate of growth in prices (inflation). This is most likely to happen if you choose a very conservative investment. The risk is that you will achieve poor ‘real return’ (inflation-adjusted return) on your capital.

Market timing risk. Anticipating market movements can be extremely difficult, as no two business cycles are the same. A strategy of trying to time the entry and exit from investment markets will expose you to greater short-term volatility and there is a range of evidence to suggest such a strategy does not consistently add to returns over time. Generally speaking, it is time in the market that counts, not necessarily the timing.

Investment risk. This is the variability, or volatility, in the level of investment returns. In general, cash is regarded as a low risk investment because investment returns are relatively stable. In contrast, shares and property are considered to be higher risk investments because returns frequently move up and down and investors are less certain of the return that they will receive.

What you want to achieve from your portfolio will ultimately influence the style and level of risk that you will need to accept.

You can book a review of your Investment Portfolio with one of our Financial Planners. At your review, we will consider the performance of investments and any changes in the asset allocation along with your objectives to determine any changes in risk within your portfolio.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Insurance forms a critical part of the financial planning process, providing financial security for you and your family. A sound financial plan will encompass both wealth creation and wealth protection.

Life is full of unforeseen circumstances which can affect your plans. Insurance may help you to meet your financial goals and obligations if you lose your ability to earn an income.

Insurance shifts the financial burden from you to the insurance provider who can afford to protect you because of the pooled premiums paid by their customers. Put simply, insurance is there to provide you with protection against the financial impact of an event such as death, disablement, serious illness or injury.

Types of Insurance

There are a range of insurance options available that can be tailored to suit your needs and personal situation. The most common types of insurance include:

Income protection
If you are unable to work due to illness or injury, income protection provides you with a monthly benefit. This is paid for an agreed period while you are unable to return to the workforce.

The premiums that you will pay for this type of policy are generally tax deductible. If you hold your insurance within super, the superannuation fund can claim a tax deduction on income protection insurance premiums which can reduce the cost of the cover.

Life insurance
Life insurance helps alleviate the financial burden your family may be left with after your death. Usually paid as a lump sum, your dependants may use this money to assist with medical costs, funeral expenses or help secure their financial future.

The cost depends on the amount of cover (age, gender and smoking status are also determining factors) you choose. The level of cover you have should be reviewed regularly to ensure it remains suitable.

To decide on how much cover you require, you should consider the following:

your children’s school fees

services you would require if you were unable to care for your children, such as a nanny

how much your dependants would require to meet their day‑to‑day living expenses, and

current liabilities, such as your mortgage.

Total and permanent disablement (TPD)
This is generally taken as an optional extra within a life insurance policy, but can also be arranged as a stand‑alone policy. In broad terms, it provides a lump sum in the event of a permanent disability that prevents you from returning to work. This lump sum can be used at your discretion to provide for your dependants, to compensate for the loss of your income, repay your debts or cover capital gains tax liabilities.

There are certain conditions that need to be met to receive a TPD benefit payment; these vary significantly between insurance providers. Before taking out TPD insurance it is important that you understand the conditions under which the insurance company will pay a claim.

Trauma
Trauma insurance is generally paid as a lump sum upon diagnosis of an eligible condition (e.g. cancer, heart disease), and the funds can be used at your discretion. You can use it to pay for additional medical care or to pay off the mortgage and relieve the financial pressure on your family.

This benefit is paid to you when you are diagnosed with an eligible condition. This will ensure that you and your family have a lump sum to cover rehabilitation, carer costs or just day‑to‑day expenses when you most need it.

Things to consider:

Should you get your life insurance within your superannuation fund?
Many superannuation funds will provide you with the option of purchasing some level of insurance through the fund. You can potentially benefit from tax deductions and cheaper costs when you hold insurance within a superannuation fund.

There is, however, often a wider choice of insurance cover available outside of your superannuation fund.

Understanding insurance definitions

It’s important to understand your cover as it may help you avoid any complications if you or your estate need to make a claim. You should read and understand the product disclosure statement along with the entire policy document. If there’s something you are unsure about, ask your financial planner to clarify it for you.

How much cover do you need and what type?
You should ensure your cover is adequate and that you are not over, or under, insured. The kind of life insurance that you need depends on many factors such as your:

lifestyle needs

dependants, and

personal financial circumstances.

How are premiums calculated?
Generally, premiums are based on the sum insured, age, sex, occupation, hobbies, smoker/non-smoker status, general health and option chosen. Premiums can be stepped (they change with age) or level (fixed for an agreed time), with assessment differing from insurer to insurer.

Stepped premium – your premium increases every year with your age.

Level premium – your premium generally does not change and is based on your age when the policy commences.

While stepped premiums are usually lower in the early years, level premiums can be a more cost-effective option if you retain the insurance for a longer period of time. If insurance cover is only required for a short time-frame, a stepped premium may be more appropriate and cost-effective.

Source: Risk Advisor

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Maybe you’re right. Maybe bad things only happen to other people. But that doesn’t mean you want to risk being caught unprepared – and uninsured.

Some sobering facts:

134,174 people are expected to be diagnosed with cancer in 2017. 68% of those will live more than 5 years after diagnosis

Hospital departments in Australia dealt with more than 10 million patients in 2014/15.

1 in 4 hospitalisations required a surgical procedure.

Trauma insurance, also known as critical illness insurance, provides a lump sum benefit if the insured suffers a “critical condition” as defined by the insurance provider. Trauma insurance is designed to help you recover financially from a trauma or crisis, such as a heart attack, stroke, cancer or other life threatening conditions.

Factors to consider when looking at Trauma insurance are:

You should ensure your insurance cover is adequate for your needs. Under-insurance can present a serious problem.

Critical illness cover is generally not held within super. However, this insurance type may be connected with other insurances that are held in super, which can reduce the administration and costs of implementing the insurances via separate policies.

Workers compensation only covers work related injuries.

Medicare and private health insurance do not cover all the costs. Health cover may be limited in the choice and flexibility of treatments. It often does not cover hospital and treatment expenses in full, and some conditions aren’t covered at all. Out of pocket expenses such as the cost of a Carer and rehabilitation expenses aren’t covered, nor is the income lost from time off work. Similarly, Government allowances and benefits often don’t go very far in covering you against all the costs involved in a major accident or serious illness.

Trauma insurance pays you a tax-free lump sum for a range of specified life-threatening illnesses or injuries. There are no restrictions on how the payment is spent.

If you’d like to know if Trauma Insurance could be a good fit for you, feel free to contact our office to speak to one of our in-house Insurance experts.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Investing through a platform allows you to savour a smorgasbord of investment options, without being inundated by the administrative tasks associated with each investment.

In simple terms, a platform is an administration service for your investments.

Many people invest in a number of managed funds, resulting in a deluge of paperwork. Investing via a platform simplifies the management of multiple managed funds in your portfolio.

Some investors also choose to invest through a platform to gain access to a range of investments that may not normally be available to retail investors.

The benefits of investing through a platform include:

Diversity and choice platforms allow you to spread the risk, investing in a range of asset classes through a variety of managed funds – with some platforms also offering direct shares and margin lending (gearing). Depending on the complexity of the platform, this could give you access to a number of different fund managers, each providing a range of different investment options.

Your investments are in one place without compromising on diversity, platforms can combine your investments under a single administration facility. You receive consolidated reports (simplifying your tax reporting), regular updates, and often 24-hour online access to your portfolio. In addition, the use of a consistent reporting style enables you to compare ‘apples with apples’ when analysing the performance of your investments.

Access to specialist and/or wholesale funds which would otherwise be outside your reach. For example, many wholesale funds have lower management fees but higher entry levels, such as a minimum investment of $500,000. While this puts the fund out of the reach for most individual investors, by using a platform, the minimum investment amount is generally a lot lower – even as low as $1,000 in some cases.

Flexible fees: some platforms provide flexible fee structures and certain fees may even be tax deductible.

You retain control: over where your money is invested and, in consultation with your financial adviser, you can create the investment strategy that is best suited to your financial needs and goals.

As long as your money remains invested through the platform, you can instruct your adviser to switch investments or change your strategy at any time, online or over the telephone. Because of these added services and functionalities, however, you may incur an administration fee for using the platform.

If you’re thinking about investing through a platform, it’s important to consider your circumstances. In terms of the fees/benefits trade-off, you should consider whether you will be better off using a platform or investing directly in the individual funds.

Interested in learning more? Ask us for more information.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.